FDI in Algeria
FDI in Figures
Rich in natural resources and enjoying economic stability, Algeria has been attracting record levels of FDI in the recent years, reaching 17.3 billion USD in 2009. These extremely encouraging figures nevertheless hide two opposing trends: a net decrease in European investments and a revival of interest from the Gulf investors.
The series of protectionist measures taken by the Algerian government, including a new regulation concerning the FDIs and imposing an Algerian majority stake of 51%, can also be seen as a discouraging factor in terms of the FDIs. Likewise, corruption and heavy bureaucracy, as well as the weak financial system and legal insecurity in terms of intellectual property rights, constitute an impediment to investment. Officially, the government remains committed to economic liberalization and continues to seek foreign investment in sectors such as the infrastructures, telecommunications, energy and water supply. There has also been a noticeable reorientation of the FDI toward the domestic market, through an efflorescence of developmental projects in transport and infrastructure.
The sectors attracting most FDI are the energy sector, followed by the telecommunications and tourism.
|Foreign Direct Investment||2007||2008||2009|
|FDI Inward Flow (million USD)||1,662||2,646||2,847|
|FDI Stock (million USD)||11,852||14,498||17,344|
|Performance Index*, Ranking on 141 Economies||127||113||77|
|Potential Index**, Ranking on 141 Economies||69||70||-|
|Number of Greenfield Investments***||33||72||32|
|FDI Inwards (in % of GFCF****)||4.7||5.6||1.3|
|FDI Stock (in % of GDP)||8.8||8.5||12.3|
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
FDI Inflows By Countries and Industry
|Main Investing Countries||2009, in %|
|Main Invested Sectors||2009, in %|
|Building, public works and hydraulics||28.0|
- Form of Company Preferred By Foreign Investors
- Limited liability company, SARL
- Form of Establishment Preferred By Foreign Investors
- Subsidiary company
- Main Foreign Companies
For further information, see the investment observatory on the Atlas Développement website.
- Sources of Statistics
National Office of Statistics
Why You Should Choose to Invest in Algeria
- Strong Points
- The low cost of energy constituents (gas, fuel and electricity): industrial gas is 22 times cheaper than the European average, electricity is 6 times cheaper. See the summary of factors costs on the ANDI website.
- The workforce is skilled and cheap; it is 10 times cheaper than in France.
- Algeria's proximity to Europe. This motivates the relocation of industrial activities which consume energy.
- A country in the middle of an economic metamorphosis.
- Weak Points
- Slow administrative procedures are often pointed out;
- The legislation is very complex, especially tax law.
- It is difficult to acquire industrial property.
- Government Measures to Motivate or Restrict FDI
To attract and encourage foreign investment, the government has set up various attractive measures. You can consult these mesures on the ANDI website.
At the same time, on the 22nd December 2008, the Algerian prime minister published a directive which leans towards restricting foreign FDIs. In effect, it has been provided that all new investment projects in Algeria have to have local majority (51%) shareholding. This directive further provides that foreign investors should only revert to local financing. Finally, FDI projects will no longer come under ANDI (National Agency for Investment Develompment) but under CNI (National Investment Council), something which would engender delays in the handling of files. More information on these new mesures is available.
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